Poor credit rating can put a stop to the outgoing spree of adventure seekers for purchasing a caravan or camper. If the thrill-lover in you isn’t careful, you can fall deeper into the rut of building negative financial history with wrong decisions.
Whether you want caravan finance with bad credit to come through easily or need to recover your score, here are the circumstances to look out for:
1. Paying in cash
27% of Australians still use cash as their go-to medium of transaction. While paying in physical currencies can be convenient for some people, it doesn’t create any change in the credit score. Not only such a transaction is invisible on your credit report, but it also fails to count as a possible opportunity to earn rewards like cash back or travel miles.
2. Shared credit with the party carrying a bad score
Adding someone to your account is a double-edged sword. Sharing an account with an authorized user doesn’t necessarily impact the credit score of the primary account. However, the score can dip if the other holder pushes over the 30% credit utilization ratio.
Additionally, if the credit record of the co-sharer in a joint account is poor, the financial agencies collectively count the score. So, if the partner’s score is low, your high credit number will be averaged out against the same and vice versa.
3. Credit Defaults and Arrears
Repayment history is one of the vital factors in your credit score report. It can constitute up to 1/3rd of the total criteria for building your score. Any pending arrears or unsettled loan carries heavy implications on the financial record of the account holder.
In the event of an inability to pay off loans immediately, it’s best to consult your lender to restructure the debt based on current capacity. Doing this labels the ongoing credit transaction as ‘closed’ instead of ‘settled’ or ‘written off status.
4. CCJ Record
CCJs are county court judgments that remain on your credit file for six years. This happens when the creditor is of the opinion that you won’t repay the loan owed, and the court decrees the judgment in their favour. Since CCJs indicate serious financial mistakes, it’s imperative that you take special acknowledgement of such orders.
One of the quickest ways to reduce the inflicted damage on your credit score is by paying the loan as soon as possible. If you manage to settle the credit within 30 days of the CCJ imposition, it won’t reflect in your financial record.
5. Failed repayment on credit agreements
The loan guarantors of debt carry the same responsibility as the original borrower. So, any default on behalf of the debtor reflects poorly on the financial history of the guaranteeing party leading to a poor credit score.
In the event of a loan default, the lending organization extends the liability to the guarantor to repay the loan. However, if the guaranteeing party also fails to fulfil its responsibility, the lenders can take action to pay off the loan.
Owning a camper or a caravan is a fantastic way of exploring new regions and travelling the world. If you want a travel vehicle, you must screen your personal financial history while seeking caravan finance with a bad credit score. Understanding the significant reasons for rejection before applying for a loan can help you receive financial help at the earliest.